Not just an accident
By George Chen
The opinions expressed are the author’s own.
We’ve talked about whether China’s economy will have a soft or hard landing. In fact, what China needs is a pause. Lots of things in China may be moving way too fast. Including our trains.
On Saturday, at least 35 people died when a high-speed train smashed into a stalled train in eastern Zhejiang province, raising new questions about the safety of the fast-growing rail network. For a Reuters story, click here.
In my view, the train crash does not only raise doubts about China’s big ambitions and effort to build its high-speed train network. It also adds to people’s frustrations over the way the country is administered. Some political commentators have said the “accident” was not really an accident but an incident, which in the end may have corruption, irresponsibility and bureaucracy to blame for.
For investors, it could be a time to short on those high-speed train related stocks. The Ministry of Railways tried the best to regain trust from the nation’s frustrating passengers that China’s latest high-speed train technology is safe and advanced. Such declarations came less than 24 hours after the tragedy that the the entire country is now mourning.
I think the market has already given its response to the rail ministry — shares of China train equipment makers fell as much as 16 percent on Monday. Meanwhile, many investors began to refocus on airlines. For a related Reuters story, click here.
Chinese companies and stocks have been under growing pressure in the past months on a variety of factors related to safety and stability.
Are Chinese food companies safe? Can accounting records and the business performance of listed Chinese companies be simply stable, rather than subject to abrupt warnings of earnings revisions, or challenges by rating agencies over credibility problems?
When we talk about the safety of China, it’s not just about the safety of the country’s transportation. The big question is if China is morally safe.
The New York Times quoted a Chinese blogger as saying: “China, please stop your flying pace, wait for your people, wait for your soul, wait for your morality, wait for your conscience! Don’t let the train run out off track, don’t let the bridges collapse, don’t let the roads become traps, don’t let houses become ruins. Walk slowly, allowing every life to have freedom and dignity. No one should be left behind by our era.”
I will stop here and leave you to consider that.
George Chen is a Reuters editor and columnist based in Hong Kong.
Photo: An injured man receives medical treatment at a hospital after two carriages from a bullet train derailed and fell off a bridge in Wenzhou, Zhejiang province July 24, 2011 REUTERS/Aly Song